No Such Thing As a Tax-Free Lunch At Google?

theodp writes "In search of the best corporate cafeteria in the world, Gourmet Live's Tanya Steel visited the Googleplex, where she found Petaluma chicken cacciatore, porcini-encrusted grass-fed beef, whole-wheat spaghetti pomodoro, and Parmesan-creamed onions on the menu in one of the search giant's 25 cafes. So, must all good things come to an end? The WSJ's Mark Maremont reports that it's debatable whether Silicon Valley's daily fringe-benefit meals are taxable, and the issue is now on the IRS's radar. 'What would a food tax on Google's meals look like for the average employee?' Maremont asks. 'Assuming a fair-market value of between $8 and $10 per meal, a Googler chowing down two squares a day could get dinged for taxes on an extra $4,000 to $5,000 a year.' That'd be just fine with UF tax-law Prof. Martin J. McMahon. 'I buy my lunch with after-tax dollars,' said McMahon. 'And I have to pay taxes to support free meals for those Google employees.'"

Comments

slow news day?

[schneidafunk]

On the otherside, an employer or contractor can 'expense' their meals if it's business related. However, I believe there is a percentage cap, based on overall income.

Re:slow news day?

[AlphaWolf_HK]

Well Google's searches obviously provide a benefit to us as users and we pay nothing for them, therefore we are getting income, which by the same argument should be taxed. Does that mean we owe the IRS every time we do a google search?

Re:slow news day?

[Applekid]

I thought we valued people paying their fair share of taxes.

The Googlers are certainly in the top 5% of earners in the US, many of them are probably in the top 1%.

Why wouldn't you want them paying their fair share?

Are we going to go after schoolchildren that trade desert cups at lunchtime because one has a higher value than another and can be called taxable income? If I pay the check for a date does that mean she has to declare it on her taxes?

Any company that provides free (to the employee) lunch is eating the cost, pardon the pun. If the issue is whether the lunch benefit is taxable, perhaps buying the food from a supplier should already pay the tax. I have no idea if it does right now or not, or what tax arrangements are to be had, but to call this a Google problem is just looking for a reason to be bitchy at those who have more than you.

Re:slow news day?

[therealkevinkretz]

They (statistically as a group) pay far more of their "share" than most. Certainly more than the professor who complains about having to subsidize their lunch - especially ironic while he eats lunch at a state-subsidized university's cafeteria.

Re:slow news day?

[tmosley]

Every time I hear "fair share", it's from someone who doesn't pay nearly as much in taxes as the people they are bitching about.

How about we bitch about cutting spending rather than finding new ways to make people pay more to our genocidal government?

Re:slow news day?

[Grishnakh]

How on earth is Google supplying free meals not "for the convenience of the employer"? Having free meals on-site means more employers will stay on-campus, rather than leave the campus for probably lengthier lunch breaks, plus they're more likely to share meals with other employees, discussing work issues. You think Google is giving out free meals out of pure generosity?

If corporations could convince employees to forgo living in their own houses, and instead live on-campus in dormatories, they'd do it in a heartbeat. It's exactly what they do in China. You get more work out of people when they don't have a personal life outside of work.

So, by your crazy logic, should smaller companies that have free sodas and coffee for employees require employees to account for every single cup of coffee they drink there, and pay taxes for it? How about companies that provide elevators for employees? Should non-disabled employees be required to pay taxes for every elevator ride they take, since they could after all just take the stairs instead? How about companies with parking lots? Should employees be required to pay taxes for the luxury of being able to drive to work instead of taking the bus, and not have to pay for parking?

Re:slow news day?

[Compaqt]

Yeah, health care should definitely be eliminated as an employer benefit. That's what's caused the entire healthcare debacle in the first place: employers pay for health because it's a pretax benefit. You end up to a place where "insurance" just means paying for everything, and has no meaning anymore. And also hugely expensive.

Buy your own health insurance for cheap (for the small chance you'll have a heart attack or other catastrophic health care problem that a few percent of the population have). For the other stuff (colds and whatnot), just pay out of pocket. It would be cheap if everyone didn't have Cadillac health programs.

Re:slow news day?

[spiffmastercow]

Yeah, health care should definitely be eliminated as an employer benefit. That's what's caused the entire healthcare debacle in the first place: employers pay for health because it's a pretax benefit. You end up to a place where "insurance" just means paying for everything, and has no meaning anymore. And also hugely expensive.

Buy your own health insurance for cheap (for the small chance you'll have a heart attack or other catastrophic health care problem that a few percent of the population have). For the other stuff (colds and whatnot), just pay out of pocket. It would be cheap if everyone didn't have Cadillac health programs.

Close, but not quite. Unless you decide that anyone who can't pay for medical care should die, health care becomes a shared cost to society. A single payer health care system would free employers from the burden of providing health care, allow entrepreneurs to pursue their own business goals without fear of losing health coverage, and provide massive cost savings by allowing everyone to receive preventative care rather than having the 50 million uninsured people end up in the ER once their condition has deteriorated to the point where they can no longer ignore their illness.

Re: slow news day?

[SplatMan_DK]

I pay an average of 52% taxes, with a 67% tax on the "last dollar". After which I pay 25 VAT ("sales tax") on pretty much everything I Buy with the exception of my house and my children's daycare. Don't even get me started on my car, which is taxed by more than 180% !

And you know what? I am happy to pay my fair share. Hell, I would pay a couple of percent more if I wasn't the only one to do so.

The problem is that the richer you get the easier it also gets to dodge taxes. The more corporations and shell companies you can wrap around your spendings the easier it is to avoid taxes. And it just so happens that most wealthy people use such schemes to avoid paying their fair share.

Yes, really. They do.

So the guy on the floor can't help but pay his fair share while the top directors never seem to do the same.

You may try to claim that only "people who have less" are bitching. But reality is: they're the only ones who have anything to bitch about. Because they can't ever use the same clever schemes to avoid their taxes (due to the simple lack of having their own full-time accountant and very large sums of cash).

The fact that "people who have less" are the ones bitching does not mean they don't have a case. Correlation != causation.

- Jesper

Re:slow news day?

[vux984]

Are we going to go after schoolchildren that trade desert cups at lunchtime because one has a higher value than another and can be called taxable income?

Do you think its worth the IRS's time to pursue 8 year olds for capital gains made by trading dessert cups on the underground schoolyard dessert cup markets? Why they might have dollars of undeclared income! Couple that with their allowance... /faceplam

If I pay the check for a date does that mean she has to declare it on her taxes?

When you say date do you mean prostitute? If so, she an independent contractor. Is the meal a business meeting? It may be a deductible expense for you.

Otherwise, you may want to look into gift taxes but your likely in the top 1% of the top 1% if you are running into your annual exclusion limits taking someone out on a date.

If the issue is whether the lunch benefit is taxable, perhaps buying the food from a supplier should already pay the tax.

That's not the point. If a valuable benefit is being provided to the employees, then the value of that benefit is counted as income, and income taxes are due. If you get a company car and you use it for personal driving then its a taxable benefit.

The only question is whether providing lunch is "work related" in the same way that providing you office supplies is "work related". If the company brings in pizza on a night everyone is working late... then no the pizza shouldn't be considered a taxable benefit. But pretty much everything with taxation works on limits and exclusions and thresholds. A gourmet cafeteria could easily cross the threshold into taxable benefit territory.

And lets say that it does. Its still a screaming good deal.If eat out $5000 worth of restaurants in a year... then I'm out $5000, plus I pay another $1000 or so in income tax on the money. I'd be delighted to not have to pay the $5000 and just have to pay the $1000. Hell, I wouldn't blink at taking a $3000 dollar reduction in income for a $5000 perk like that.

Crying over income tax on taxable benefits is nuts.

Re:slow news day?

[johnlcallaway]

Employment relationship? Are you fucking stupid? Since when is taxation based on employment only? The government wants to tax any and every transaction where net GAIN occurs. Win the lottery? Pay up. Found hidden treasure in the backyard, pay up. The school children example is absolutely relevant. If a child has a net gain by trading his dessert cup, that's GAIN and therefore technically taxable.

And since when do software engineers opt to take their salary in the form of food? Meals are a fringe benefit designed to keep employees happy. Will you tax free on site gym usage as well? How about fancy, office chairs? Or how about taxing free legal advice that some companies offer? How about taxing employee discounts on the products the company sells? Company holiday parties? Tax that bitch. You know what, you and IRS can go eat a bag of dicks. Stop taxing everything under the sun.

Sure, we can stop taxing everything. As soon as a bunch of people decide that we shouldn't be giving food and money to people who don't work or are disabled, provide fire and police protection, build highways, and a bunch of other shit that people keep asking the government to provide.

CEOs have to pay for their company cars if they use them for personal use. It's not unusually for people that own a business to have the business pay their bills, so why shouldn't that payment be taxed?? Obamacare has decided to tax overly generous health care plans.

If a benefit becomes a significant source of savings for employees, such that salary could be reduced because the benefit makes it worthwhile, why shouldn't it be taxed?? When the government raised income taxes, companies switched to options and benefits to compensate high-salary employees because it became cheaper.

Google providing food to it's employees is a method to retain workers without having to pay them more, and may encourage employees to hang around the office and work more. So Google gets the benefit of buying food, which they don't have to pay unemployment tax or medicare tax or medicaid taxes on and use that as 'payment' to work there instead of shelling out bigger paychecks.

There is a significant difference between providing a lunch every month of sandwiches, and providing free food every day. While I don't completely agree with taxing this as income on a personal level, it is consistent with existing taxes.

But, like the Occupy Anything hypocrites, feel scream out to tax everyone but me. Or feel free to scream out that taxes need to be cut without offering to reduce spending on social programs.

Re:slow news day?

[spiffmastercow]

A single payer health care system would free employers from the burden of providing health care, allow entrepreneurs to pursue their own business goals without fear of losing health coverage, and provide massive cost savings by allowing everyone to receive preventative care rather than having the 50 million uninsured people end up in the ER once their condition has deteriorated to the point where they can no longer ignore their illness.

The role of an emergency room as a health care center is there because they are required by law to not refuse treatment and that many people somehow figure out how to avoid paying for medical costs. It is skewing the way that people seek health care assistance when

The real "solution" is to simply let doctors be entrepreneurs and for them to charge reasonable professional rates for services rendered in an open competitive marketplace where the patients are the customers. All of the messes in the health care industry are precisely because this doesn't happen and the government trying to meddle into that client-practioner relationship.

Thank goodness engineers aren't paid by insurance companies and government agencies to build homes and businesses.... at least in most cases. Even more so, that such activity is seem as "essential to life" and deemed something that should be nationalized with all engineers encouraged to become government employees.

I like how you edited out this part of my comment:

Unless you decide that anyone who can't pay for medical care should die, health care becomes a shared cost to society.

You and I disagree fundamentally on whether or not someone should die because they're broke. I don't think they should, you clearly think they should.

Re:slow news day?

[Grishnakh]

Those things aren't permanently given to employees.

Irrelevant. Those are services provided which have a monetary value. There's lots of places where you have to pay $5 or $10 a day to park your car. Elevators cost money to operate, if for no other reason than the electric power needed.

Never worked anywhere where soda was free, I even worked in places where coffee/tea were not gratis.

There's tons of tech companies where sodas and other drinks are available for free; this was particularly true during the dot-com boom, probably less so now.

There's tons of places where there's coffee pots available to use, as well as microwave ovens. These are free even if you bring in your own food items to use in them, but that costs the company money for the electricity.

But these costs (coffee/tea/water) are almost negligible compared to lunch.

Wrong: a coffee drink at Starbucks can cost $4. You might say that Starbucks is overpriced, but that's irrelevant: someone obviously thinks a coffee drink is worth $4, and that's a large fraction of a lunch. It could be argued (by the IRS) that those free coffees are also worth $4, and employees should be paying taxes on them.

But an additional difference: lunch is personal time.

No, it's not. There's no such thing as "personal time" when you're a salaried employee.

No you don't.

[FooAtWFU]

"And I have to pay taxes to support free meals for those Google employees.'

I'm pretty sure that Google's advertisers pay Google to pay for the free meals for those Google employees. Without prejudicing any other case for equitable treatment, just because someone isn't paying taxes doesn't mean they're robbing you. It's the fruits of their own labor. In the absence of laws to the contrary, is Google not entitled to dispose of their money as they see fit?

Re:No you don't.

[mwvdlee]

Actually, since that Prof. McMahon is a Prof. at some U, his salary is paid from taxes. It's HIS lunches that are paid by tax dollars.

Re:No you don't.

[BitZtream]

And he doesn't support those 'free meals' for Google, Google does. Its not like the IRS is paying the bill for Google.

He's just a whining bitch.

Re:No you don't.

[SwashbucklingCowboy]

Google is undoubtedly considering free meals as a business expense and thus it's paying lower taxes (or in Google's case, getting more money back from the government) by providing free meals. So yeah, he - and I - and you - are helping to pay for those free meals.

Re:No you don't.

[SJHillman]

It's the RIAA model applied to taxes. If someone is getting something for free, it must be coming out of my pocket.

Re:No you don't.

[asylumx]

You say that as if you believe he doesn't earn his income. Following that logic every dollar in your wallet, at one point, came directly from the government. You're as much a gov't leach as he is.

Re:No you don't.

[Anonymous Coward]

When one payer dodges taxes, it raises rates for everyone else so the government can have the same amount of revenue. The professor is making a fair point.

Re:No you don't.

[dr2chase]

Unless deficit spending were a good idea, and right now, it is.

Re:No you don't.

[SuperBanana]

his salary is paid from taxes. It's HIS lunches that are paid by tax dollars.

NO, the WORK he does for the University is paid for by tax dollars. He then chooses to spend them on lunch. His lunches are "paid from" his work effort.

If his lunches were "paid by tax dollars", that would mean he was eating for free. He's not.

Re:No you don't.

[Anonymous Coward]

You say that as if you believe he doesn't earn his income.

He's a professor of tax law, which in my book says he's little more than a witch doctor but with fewer scruples. When push comes to shove, he'll be on the same ship as the telephone sanitizers.

Re:No you don't.

[epyT-R]

Ultimately, the government is punishing everyone else unfairly because the IRS et al has a culturally reenforced entitlement complex about other people's money while the legislative branch refuses to operate within a balanced budget. This professor, probably suffering from the left wing tunnel vision found on most campuses, is just expressing faux 'outrage' at the schleps working 16hr days at google getting a few perks. Google probably treats it as a business expense, and it makes sense. Workers who stay on campus during lunch are more likely to be doing work than those who go out. Really, how does this differ from other perks given by other companies?

Seriously, with the deficit as high as it is, the IRS needs to quit going after the low hanging fruit and focus on people and organizations who truly are evading taxes on a massive scale. If they are targeting google for evasion, considering google's income, employee lunches can't possibly be the major issue.

Re:No you don't.

[Feyshtey]

The only reason you say that defecit spending is a good idea right now, is that if we stopped we'd have to close a shitload of programs.

Defecit spending is not a bad thing, in principle. But that relies on the premise that you are not over-extending yourself to a point that you cannot feesibly repay the debt. Having a credit card with a balance is not stupid. But it is stupid to have 10 credit cards all maxed out when you make $50k / year, and even more stupid to be applying for more. Our government is at that point.

No amount of taxation can close the gap if we do not cut spending. You could take every dime from the richest Americans and still be spending more than we take in. AND you wouldnt have the on-going capital in the economy that that richest Americans are responsible for.

Re:No you don't.

[LordLimecat]

"Not paying further taxes" =/= "the taxpayers are paying for it".

The massive difference that many dont get is, "taxes" arent the "normal state". The normal state is that you earn money and can use it as you see fit, then the government is PERMITTED to take some taxes off of that.

So if a company is taxed at 10% instead of 70%, that doesnt mean theyre "robbing the taxpayers" to the tune of 60%; it means that the government is currently only permitted to levy a 10% tax on them.

Re:No you don't.

[Applekid]

Blame Regan... He started the insanity

No, blame John Keynes, he advocated what the various world governments started doing in the 1930s.

Jealousy of Google perks, nothing more

[BitZtream]

So if I go home and eat my lunch ... no taxes since you don't get taxed on food (maybe in California, you guys are nutjobs ;).

But if I eat it at work, where a cook makes my meal instead of my wife ... that I get taxed for?

Lets see, whats better? Me driving home for lunch, wasting gasoline, road wear and tear and pollution ... or staying at work for lunch?

The UF tax law professor just needs to be shot. He's just a whining bitch. Its not like he has a real job, he's a fucking professor, he doesn't actually work anyway. Two classes a week that he sits in while his assistants do all the work or someone else lectures. String his ass up from a tree until he stops talking. No, I don't like lawyers, especially ones who like to whine about how they are treated unfairly while essentially doing nothing but draining otherwise useful resources from the world and our budget.

yes, let's tax free work lunches

[Anonymous Coward]

... and while we're at it let's tax free coffee, free snacks, hell even all that free water workers drink on break.

Even better, let's tax all time spent on break -- I'm sick of supporting lazy workers on break with my hard-earned-no-break hours!

Does the professor also pay for the water he uses?

[phayes]

Say the professor prefers tea & fills his teapot from his university's tap. Does he have an individual meter so that his usage is not coming out of the pocket of the rest of the faculty or the students? If a corporate lunch is an untaxed benefit shouldn't he have one for his tea? Shouldn't he also have one for the toilets he uses? How is his use of these common resources any different from free lunches -- or is it just a matter of time until this becomes the norm as well??

Re:Another symptom of pro-corporate bias in Americ

[Richy_T]

First is the blatant unfairness: why do Google employees get tax-free lunches when, someone else (say, for example, me) has to pay for my lunch with post-tax income.

Jeez, take it up with your employer. Why do people feel that if they can't get ahead themselves, they need to try to take others down?

Re:Another symptom of pro-corporate bias in Americ

[Anonymous Coward]

Because without laws that keep things fair like this, people abuse the system. What happens when Google decides to reduce salaries but pay your mortgage. They drop it a little further and pay for your car. What's the problem? It's a nice benefit, stop being jealous. But now the tax base just went down. It's just Google. Well, if that's the status quo, then it won't be just Google. Pretty soon, companies are skirting around taxes by giving employees tax free benefits in lieu of salary. Which leaves those still paying taxes on their salaries holding the bag of those who aren't.

IRS LINK!!!

[istartedi]

Did he bother to google (heheh) the IRS Publication for this? (warning, PDF). Scroll down and:

The fair market value of meals or lodging furnished to an employee by an employer may be nontaxable to the employee. IRC Â119 provides an exclusion for meals and lodging under certain circumstances. Cash provided for meals is not excludable under this Code section; however, under certain circumstances cash can be excluded as a de minimis fringe benefit. IRC Â119

And a few other paragraphs clarifying this seem to indicate that Google and all the other Valley companies that do this are following the rules just fine. Sheesh! I'm not even a lawyer and certainly not a friggin' professor of such.

Re:typical

[therealkevinkretz]

Not charging employees income tax on an employer-provided lunch is "letting them walk off with the henhouse"? And coporations complying with tax laws in order to not pay more than they're legally required are "malefactors"? I'd argue that they'd be in dereliction of their duty to shareholders if they *didn't*.

Re:Another symptom of pro-corporate bias in Americ

[CQDX]

The thing is that in your examples the law is pretty unambiguous. If the company is paying for your home and car and they aren't used for work, it's considered employee income and is subject to regular income tax. Meanwhile, food given to regular employees at work, like factory worker or doctor eating at the on-site cafeteria, or the soldier in the field eating an MRE, is normally not counted as a benefit for taxing purposes. The idea behind the exception was that the employer couldn't afford to give the employee time off to leave facility to eat. The question is whether or not this rule should also apply to tech workers who have a more flexible schedule.